Videos below the fold.
I caught Edward Kleinbard the other morning on Cspan. He is a professor of law and business at USC and a fellow at the Century Foundation. His book: We are better than this: How Government Should Spend our Money. If you google his name, articles will come up from October 2014. It attracted my attention because of my thinking as expressed in my article back in February of 2013. The rest of the dinner table deficit/debt discussion: Equity His thesis is that we need to be spending more as it is investment that creates the capital needed to grow the nation. Focusing just from the view summed up in the phrase “tax and spend” misses what government is about. Government doesn’t tax, government “principally spends money” via investment and insurance. Spending should be complimentary to the private sector. When government “invests” the pie gets bigger not smaller.
He worked on Wall Street for “many decades” also. How he kept his humanity as you will hear in the presentation while being on Wall Street…?
Let me start though with this short video as it is another business person like me who appears to get my posts regarding what is needed in this country to go along with the equity spending. I first mentioned this position in 2010 regarding the SOTU address. Here we are 2015 and we small business people are still saying the same thing. Professor Kleinbard addresses small business too as part of understanding the overall condition and needs.
I give you Dave Boris, owner of Hel’s Kitchen Catering.
I put this short video here because what he is talking about, in fact what the entire AFL-CIO Summit on Raising Wages was talking about is the other half of what should be a complete plan and thus strategy for our nation and every nation. (Remember when anything the AFL-CIO did always made the major news leads? Remember when we used to learn about the AFL-CIO in social studies?)
At the end of his presentation, the local economy is mentioned. It is this aspect of Mr. Boris’ comments that are hitched to Professor Kleinbard’s thesis. Spending equity to build additional capital and thus equity needs to happen at every level thought Professor Kleinbard is addressing national spending.
Here is Professor Kleinbard on Cspan. I list after the video the times when specific subtopics are brought up. Please listen to the caller’s questions as you will hear their influence and better appreciate Professor Kleinbard’s responses.
3:00 Education David Wessel, Brookings report on study. Spending 10% more/yr on public ed K – 12 produces a 7.25% greater wages for the individual for their life. An estimated $1300/year more. No private investment that can capture that kind of return for the nation.
5:00 Income inequality
6:00 US is in fact the “lowest taxed country” of the wealthy nations, OECD. We systematically under invest.
8:00 Not shift spending per say, but tax 2% of GDP more to keep what we have and then do the investing. IE: we spend more public money on educating rich children than poor children. I of 4 OECD countries to do this. His word for it: Bazar. (The interviewer seems to like to hear that tax rates don’t need to change.) Addresses military spending and health care spending.
13:00 Addresses 40% of population not paying income taxes. Calls it a “red herring”. Question via tweet.
16:30: affordable higher education. Notes it is a necessary capital investment to become a high functioning adult in this time. “Human capital” We make it extremely expensive and is a failure of the US toward its citizens. (See my report on World Bank wealth creation and intangible assets.)
21:00 The question about over burdened small business. He notes the confusion in the discussion of small vs large do to many “small” being pass through corporations. It is an unusual arrangement around the world. A lot of “hype” around the word of small business.
24:00 The “Growth Fairy”. Taxes went up and Bill O’Reilly showed up for work the next day. The education investment example is not being captured by the growth fairy story.
26:00 Dynamic scoring buzz word lately assumes all government spending has zero return. It is false.
26:13 The first misinformed caller from Alabama. It’s the debt, government throwing money away. Listen to the end of the question.
32:32 We need to focus more on what we want out of our government, taxes only pay for it. (As I note often, it’s not the taxes it’s what we are spending it on that is the problem.) Taxing and spending is “a way of expressing our fiscal soul.” “We express our values.” This is his cause. It’s his ideals coming out and I think he is like me in asking himself why don’t people get it?
35:05 Arlington TX caller: It is the takers vs makers question. She said she did not work hard enough as she knows she should have to be come a maker and is thus a taker. If this is how she truly feels, then it a true tragedy as she has accepted guilt that she is guiltless of. He responds by talking about the gifts receive as a result of your birth. It drives him “a bit crazy when people who succeed in life refuse to acknowledge that luck had anything to do with it..”
38:00 He is not suggesting a simple egalitarian approach.
39:00 He addresses Adam Smith.
I don’t think he is presenting anything new. In fact, we have done this and understood all of what he is saying in the past. My only concern regarding raising rates is that his approach does not address the income shift that has happened. I think maybe he is being “tactful” here trying to address the concerns as Coberly often responds with regarding “soak the rich” like statements. If we were to implement Professor Kleinbard’s strategy then I could wait on the direct income tax increase of the upper income levels as over time I think he is correct and this part of the inequality would be addressed. However, Professor Kleinbard does not address here at least, the other aspect of elevated income tax rates that I qualify must come with multiple brackets: Economic Rents and as Roosevelt referred to it, Economic Royalty. One posting I touch on this is here. I reconstruct the 1936 tax table here.